Old Mutual (LON:OMU) management used its annual results presentation for the year ended 31 December 2025 to outline progress against medium-term targets, provide detail on capital actions, and discuss areas where performance fell short of internal goals—particularly value of new business (VNB) in its South African Life and Savings operations.
Leadership and board update
Group CEO Jurie Strydom opened by announcing that chairman Trevor Manuel will retire at the company’s AGM on 5 June, after turning 70 this year. Strydom said Manuel’s retirement marks “a very big day for Old Mutual,” and noted that Roger Jardine has been announced as chairman designate. Jardine joined the board in September, and Strydom said the management team has already begun engaging with him ahead of the transition.
Key group metrics, value measures, and VNB pressure
Group CFO Casper Troskie said the increase in value exceeded distributions, but methodology and assumption changes offset improved market performance and declining yields. He also disclosed a ZAR 2.8 billion reallocation within Old Mutual Africa Regions from covered business to banking and lending as part of a refined methodology, stressing that the change affected line items but did not impact total GEV.
Return on group equity value (RoGEV) for 2025 was reported at 4.1%. Troskie said RoGEV would have been 10.1% after adjusting for “material methodology and assumption changes,” almost entirely implemented in the first half. He cited three main items:
- an increased cost of non-hedgeable risk capital charge,
- a valuation methodology change for OM Bank to reflect value unlock as rollout milestones are met, and
- a persistency basis change in Mass & Foundation.
South African Life and Savings was described as the primary driver of the group’s decline in VNB. Troskie attributed the VNB pressure to the assumption and model changes, as well as lower annuity and umbrella retirement fund sales. Strydom said recovering VNB and VNB margin is a key management focus, with the group targeting a return to the 2%–3% VNB margin range over time after reporting a 1.2% VNB margin (down from a 1.4% figure cited at the interim stage).
Capital management, solvency, and share buyback progress
Management reiterated a “systematic approach” to capital management, centered on maintaining resilient solvency while prioritizing shareholder distributions while returns remain below longer-term aspirations on a normalized basis. Troskie said the group expects cash remittances to be 70%–80% of adjusted headline earnings (AHE) before optimizations and special dividends, while noting that optimizations lifted cash remitted to 123% of AHE in 2025.
Discretionary capital increased to ZAR 6.1 billion, which Troskie said almost doubled year-on-year due to strong remittances net of shareholder dividends. He said that balance includes:
- ZAR 2 billion of expected OM Bank capitalization in 2026 and 2027,
- ZAR 2.3 billion committed to completing the approved share buyback, and
- the remaining ZAR 1.8 billion to be guided by a horizons-based approach.
On the buyback, Strydom said Old Mutual initiated a ZAR 3 billion repurchase program in September. As of 31 December 2025, ZAR 0.7 billion had been executed, rising to ZAR 1.3 billion as of the day before the presentation. He said execution depends on where the share trades relative to GEV, and the trading mandate resets based on published GEV per share, with the program running to year-end.
The group’s held solvency ratio was 162%, within the 155%–185% target range. Troskie cited lower yields and higher prescribed equity shocks as key market drivers, along with capital source optimization. He said subordinated debt fell by ZAR 1.8 billion in 2025 as the group smoothed its maturity profile. The gearing ratio was 14.2%, below the group’s 15%–20% target range, which management described as indicating capacity to raise further debt.
Earnings, operating trends, and cluster highlights
Adjusted headline earnings per share increased 26%, which management said was primarily driven by shareholder investment returns, including equity market performance in South Africa and Malawi. Troskie emphasized that Malawi had a material impact on 2025 earnings, adding that sensitivity analysis was provided in financial statements. He said that assuming a Malawian kwacha devaluation of between 50% and 30%, the AHE increase would have been between 11% and 16%. Old Mutual continued to exclude Zimbabwe from AHE due to restrictions on dividend access.
Results from operations (RFO) per share increased 15%, supported by improved operating performance in Life and Savings and Old Mutual Insure, despite ongoing investment in OM Bank. Within clusters, Troskie cited:
- Mass & Foundation RFO down 8%, driven by stronger long-term persistency assumptions on the funeral book (partly offset by higher premiums and cover increases and improved outcomes versus the strengthened basis).
- Personal Finance RFO up 28% off a low base, helped by improved mortality and annuity longevity experience and market movements, partly offset by assumption changes.
- Wealth Management profits up 12%, driven by improved annuity revenue from higher average assets and expense growth below inflation.
- Old Mutual Corporate RFO up 23%, aided by strong market conditions and underwriting experience.
- Old Mutual Insure RFO up 14%, supported by top-line growth, margin improvement, and expense management, though the second half was impacted by a one-off exceptional provision linked to a third-party sale in the Alternative Risk Transfer business.
Responding to analyst questions on Insure’s second-half expense ratio and underwriting margin, management said three factors contributed: a precautionary impairment/provision in the cell captive business, expensing certain technology project costs (including investments in Gen AI), and one-time costs as ONE Financial Services builds capacity to transition to its own license.
Banking build-out, cost savings, and other notable discussion points
Strydom said OM Bank has been focused on building a customer base since going live in September, with a customer run rate of about 3,000 per day. Management said 46% of customers were originated through the Old Mutual Finance (OMF) branch network and that there was a 48% conversion of the active Money Account customer base. The group said it would begin “above-the-line” marketing campaigns to the public in the second quarter, expecting a shift toward more “new to Old Mutual” customers. Executives reiterated that activation, transactional volumes, and credit performance will be key tests in 2026 and 2027.
On consumer behavior affecting underwriting, OM Bank CEO Clarence (speaking during Q&A) said elevated gambling levels have been observed, including voucher usage that the bank believes is linked to gambling activity. He said this can reduce disposable income and cause some customers to fail credit assessments, and that the bank has taken precautions by using additional or alternative data to assess that risk at origination.
On expenses, management reiterated a ZAR 2.5 billion cost savings commitment (equivalent to 10% of 2024 operating costs). Strydom said ZAR 450 million of savings were achieved in 2025, with 2026 described as a “significant execution” year. Troskie added that savings reporting will expand in 2026 with reconciliation to the IFRS expense base and net savings tracking after inflation and other adjustments. He said 2025 savings were achieved after accounting for inflation and ZAR 440 million of restructuring costs, while shareholder operational costs fell ZAR 246 million, or 15%, excluding restructuring costs.
Management also addressed a negative ZAR 808 million expense assumption change in embedded value, explaining it reflected elevated short-term costs associated with implementing cost reduction initiatives. Separately, Strydom said Next176 costs rose in 2025 due to restructuring, but going forward the portfolio will be managed by Futuregrowth, with costs “very significantly rationalized,” albeit with some one-off rationalization costs expected.
About Old Mutual (LON:OMU)
Old Mutual Limited, together with its subsidiaries, provides financial services primarily in South Africa and rest of Africa. The company operates through Mass and Foundation Cluster, Personal Finance and Wealth Management, Old Mutual Investments, Old Mutual Corporate, Old Mutual Insure, and Old Mutual Africa Regions segments. It offers risk products, including group risk and funeral covers; savings; lending; and transactional products. It also provides financial advice, investment, and income products, as well as asset management services.
